Bigger Than 2008 Crisis: CXMT Variable Triggers KOSPI Plunge

*Editor's Note: 'AI PRISM' (Personalized Report & Insight Summarizing Media) is an "AI-based personalized news recommendation and summary service" developed with support from the Korea Press Foundation. It selects and provides six customized news items by reader type.

1. KOSPI Down 28.9%, Losses Exceeding Financial Crisis

- Key Summary: The KOSPI closed at 6023.66 on the 28th, recording a return of -28.9% over the month of July, surpassing the maximum loss during the 2008 financial crisis (-23.1%). Analysts say that China's explosive listing of Changxin Memory (CXMT) and news of its in-house manufacturing of deep ultraviolet (DUV) lithography equipment heavily weighed on investor sentiment. The rise in the credit default swap (CDS) premium on Nvidia corporate bonds and Citadel Securities' forecast of a surprise FOMC rate hike are also cited as factors that widened the losses. However, with the 12-month forward price-to-earnings ratio (PER) falling to 5.1 times, expectations for bargain-hunting at the bottom are also being raised.

2. Nvidia Leases 73 Trillion Won Data Center, Reigniting Circular Financing

- Key Summary: Nvidia signed a contract to lease the entire 1-gigawatt (GW) facility being built in Texas by data center company Hut 8 for up to $50 billion over 15 years. This contract helped lower Hut 8's corporate bond financing costs, and after completion, it will be subleased to neocloud partners. Following the earlier disclosure of discussions on payment guarantees of up to $250 billion for OpenAI's data center, this contract is also interpreted as a similar structure, raising concerns over circular financing. The Financial Times (FT) noted that Nvidia's role in the AI infrastructure market is expanding more and more.

3. Hanwha Ocean, Samsung Heavy Industries Diverge on Currency Hedging

- Key Summary: Hanwha Ocean's second-quarter operating profit was 736.1 billion won, up 98.0% from a year earlier and beating market forecasts, while Samsung Heavy Industries posted 325 billion won, a 58.7% increase but falling short of forecasts. Hanwha Ocean took an open approach directly exposed to exchange rate fluctuations, fully reaping the benefits of the recent weak won, while Samsung Heavy Industries maintained 100% currency hedging that fixes the exchange rate at the time of ship orders, and past contracts at low exchange rates weighed on its earnings. Samsung Heavy Industries said that improvement in profit margins would become visible from the end of the year, when volumes contracted at the mid-1,400 won level or higher are reflected in sales.

4. Mass Production of DUV Would Narrow Tech Gap Further, Boosting CXMT Market Share

- Key Summary: With China moving to mass-produce its own deep ultraviolet (DUV) lithography equipment, the possibility has been raised that the last barrier that had constrained its semiconductor rise may be shaken. Unlike deposition, etching, and cleaning, lithography is the only field in which China has not yet achieved self-sufficiency, and led by Changxin Memory (CXMT), the competitiveness of chipmakers is growing alongside. However, some point out that it is too early to view this as an achievement in technological independence, as next year's DUV supply volume will amount to only 20 units, far short of ASML's supply volume last year (131 units), and its performance has not been verified either. Chinese media forecast that the self-sufficiency rate for mid-tier general-purpose DRAM, currently at 8%, would rise to 30% by 2028.

5. K Car (381970), 25 Billion Won in Cash Despite 2 Trillion Won in Sales, Will It Fill Its Coffers Under KG?

- Key Summary: K Car, Korea's No. 1 directly operated used car platform, posted record results last year with sales of 2.4388 trillion won and operating profit of 76 billion won, but its debt ratio rose to 151.1%, worsening its financial soundness. This was because Hahn & Company, the private equity fund that was the major shareholder, continued paying dividends exceeding net profit every year for the past three years, reducing cash and cash equivalents to 25.4 billion won. Hahn & Company earned more than 1 trillion won in profits, over five times its investment, through dividends and the sale, and handed its stake to KG Group. KG Group plans to place emphasis on strengthening business competitiveness rather than dividends, and to grow K Car into a global platform.

6. "Reflecting Economic Slowdown, Start of Downturn" vs. "Supply-Demand Factor, Excessive Correction"

- Key Summary: With the KOSPI plunging nearly 11% in a single day, the diagnoses of five stock market experts diverged between the theory that this marks the start of a downturn and the theory of an excessive correction. Lee Jin-woo, head of the Meritz Securities research center, noted that the direction of earnings itself has not turned downward, while Jung Yong-taek, senior research fellow at IBK Investment & Securities, diagnosed it as the start of a downturn with the KOSPI 9000 level as the peak. Experts agreed that it is difficult to present a downside support line in numbers, as foreign supply-demand and investor sentiment, rather than semiconductor fundamentals, are shaking the market. This week's earnings announcements from SK hynix (000660) and Samsung Electronics (005930), along with U.S. Big Tech conference calls, are cited as variables that will determine future direction.